Appropriation Bill (No. 2) 2010-2011

2
The main purpose of the Bill is to propose appropriations from the
Consolidated Revenue Fund (CRF) for services that are not the
ordinary annual services of the Government.

3
Appropriations for the ordinary annual services of the Government
must be contained in a separate Bill from other appropriations in
accordance with sections 53 and 54 of the Australian
Constitution . Consequently, the Bill proposes appropriations
that are not for the ordinary annual services of the Government.
Annual appropriations that are for the ordinary annual services of
the Government are proposed in Appropriation Bill (No. 1)
2010 . Other annual appropriations that are not for the ordinary
annual services of the Government are proposed in Appropriation
(Parliamentary Departments) Bill (No. 1) 2010-2011 .

4
This Explanatory Memorandum should be read in conjunction with the
2010-2011 Portfolio Budget Statements (PBS) which contain details
of the appropriations set out in Schedule 2 of the Bill . The
PBS are published and tabled in the Parliament in relation to the
Bill.

Structure of appropriations in the Bill

5
The Bill provides for the appropriation of specified amounts for
expenditure by Australian Government agencies (primarily being
agencies under the Financial Management and Accountability Act
1997 (FMA Act )
plus payments to bodies under the Commonwealth Authorities
and Companies Act 1997 (CAC Act bodies).

6
Part 1 of the Bill deals with definitions, the interpretative role
of the PBS and the concept of notional payments.

10
Part 5 deals with credits to Special Accounts (clause 20), the
conditions that apply to payments of State, ACT, NT and local
government items (clause 21) and provides for amounts to be
appropriated as necessary (clause 22). Clause 22 recognises
that the appropriations proposed in the Bill may also be varied by
the FMA Act.

4
Clause 4 declares that the PBS are extrinsic material under
paragraph 15AB(2)(g) of the Acts Interpretation Act
1901 (AI Act) that may be used to ascertain the meaning of
certain provisions in accordance with subsection 15AB(1) of
the AI Act. The purpose of the PBS
is to provide information on the proposed allocation of resources
to Government outcomes by agencies within each portfolio. The
PBS provide information to enable
Parliament to understand the purpose of appropriations proposed in
the Bill. The term “PBS” is defined in the Bill, at
clause 3, to mean the Portfolio Budget Statements.

Clause 5—Notional payments, receipts etc.

5
Clause 5 ensures that payments between agencies result in a debit
from the appropriation for the paying agency. For example, the
payments of the amounts in Schedule 2 from one FMA Act agency
to another do not require, in a constitutional sense, an
appropriation, because both agencies operate within the CRF.
However, for reasons of financial discipline and transparency, the
practice has arisen for these payments between agencies to be
treated as though they required an appropriation, and to debit an
appropriation when such notional payments are made.

6
Clause 5 provides that notional transactions between agencies are
to be treated as if they were real transactions. Notional
transactions, therefore, require the use of a drawing right and the
debiting of an appropriation made by Parliament. When an FMA Act
agency makes a payment, whether to another FMA Act agency or
another part of the same agency (such as a different
“business unit” within the agency), it is to be treated
as a “real” payment. This means that the appropriation
made by Parliament is extinguished by the amount of the notional
payment, even though no payment is actually made from the CRF.
Similarly, a notional receipt in such a situation is to be
treated by the receiving agency (where relevant) as if it were a
real receipt. This does not mean every internal transfer of public
money involves a notional payment and receipt. As explained in
Regulation 19 of the Financial Management and Accountability
Regulations 1997 (FMA Regulations), some transfers of
public money from one official account to another do not involve a
notional payment or debiting an appropriation.

Part 2—Appropriation
items

Clause 6—Summary of appropriations

7
Clause 6 sets out the total of the appropriations in
Schedule 2 of the Bill. Importantly, the amounts in
Schedule 2 may be adjusted under the provisions in Part 3
of the Bill. In particular:

·
States, ACT, NT and local government items and administered items
may be reduced in accordance with clause 12;

·
Administered assets and liabilities items and other departmental
items may be reduced in accordance with clause 13;

·
CAC Act body payment items may be reduced in accordance with
clause 14; and

·
items may be increased by a determination under clause 15 (Advance
to the Finance Minister).

8
The amounts in Schedule 2 of the Bill may further be adjusted
further in accordance with sections 30, 30A, 31 and 32 of the FMA
Act. Specifically:

·
Section 30 allows an agency to re-credit, to an appropriation that
had been relied upon for an initial payment by the agency, an
amount equivalent to the repayment. The re-crediting, or
reinstatement, authorised by section 30, can result in the total
amount paid from the CRF in gross terms exceeding the amount
specified in an item. Section 30 also applies to notional
transactions between and within agencies.

·
Appropriations may be adjusted by amounts recovered by an agency
from the Australian Taxation Office for Goods and Services Tax
(GST), in accordance with section 30A of the FMA
Act . The amounts specified in Schedule 2 exclude
recoverable GST. The appropriations shown represent the net amount
that Parliament is asked to allocate to particular purposes.
Section 30A has the effect of increasing an appropriation by
the amount of the GST qualifying amount arising from payments in
respect of the appropriation. As a result, there is sufficient
appropriation for payments under an appropriation item, provided
that the amount of those payments, less the amount of recoverable
GST, can be met from the initial amount shown against the item in
Schedule 2. Section 30A also applies to notional transactions
between and within agencies.

·
Departmental items may be increased to take into account certain
other amounts received by an agency, if those receipts are
prescribed by the FMA Regulations, in accordance with
section 31 of the FMA Act.

·
Items may be adjusted to take into account the transfer of
functions between agencies, in accordance with section 32 of
the FMA Act. It is possible that adjustments under section 32
may result in new items and/or outcomes being created in an
Appropriation Act. It might also result in amounts being
transferred between Appropriation Acts.

Clause 7— State, ACT, NT and local government items

9
Clause 7 provides administered appropriations for financial
assistance to the States, ACT, NT and local governments. State,
ACT, NT and local government items are appropriated separately for
outcomes, making it clear what the funding is intended to achieve.
The amount specified in Schedule 2 for an outcome may be applied by
an agency for the purpose of making payments to any of the States,
ACT, NT or local government authorities for the purpose of
achieving that outcome.

Clause 8—Administered items

11
Subclause 8(1) provides for the appropriation of new administered
outcome amounts to be applied by an agency for the purpose of
contributing to the outcome for an agency. An administered item is
defined in clause 3 to be an amount set out in Schedule 2
opposite an outcome for an agency under the heading “New Administered Outcomes”. As with administered items in
Appropriation Bill (No. 1) 2010-2011 , New
Administered Outcomes are appropriated separately for
outcomes (i.e. unlike departmental items, the split across outcomes
is not notional), making it clear what the funding is intended to
achieve. Schedule 2 specifies how much can be expended on each
outcome. New Administered Outcomes are
proposed when:

·
an agency seeks administered operating appropriations for the first
time (including existing agencies that have received departmental
operating appropriations in the past);

·
annual administered operating appropriations are proposed for the
first time, for programs previously funded by special
appropriations; and

·
an agency’s outcomes are changed to reflect new program
objectives, strategies and/or activities.

12
The purposes for which each administered item can be spent are set
out in subclause 8(2). Subclause 8(2) provides that where the
PBS indicate a particular activity is in respect of a particular
outcome, then expenditure on that activity is taken to be
expenditure for the purpose of contributing to achieving that
outcome. The outcomes are not, however, necessarily tied to the
existence of a particular agency (e.g. abolishing a department will
not affect the valid operation of an appropriation for an
administered item for an outcome of that department, because the
purpose of the appropriation does not depend on the existence of
the department).

13
New administered outcomes are those administered by an agency on
behalf of the Government (e.g. certain grants, benefits and
transfer payments). These payments are usually made pursuant to
eligibility rules and conditions established by the Government or
the Parliament. Specifically:

·
administered items must be spent in accordance with rules and
conditions established by the Government or the Parliament; and

·
there is a process in clause 12 for dealing with administered
items that are not fully expensed or spent during the financial
year.

14
The Finance Minister manages payments from administered items by
agencies through the issuing of drawing rights in accordance with
sections 26 and 27 of the FMA Act. Drawing rights control who
may spend money from appropriations, and allow for conditions and
limits to be set by the Finance Minister (or the Finance
Minister’s delegate) in relation to those activities.

Clause 9—Administered assets and liabilities items

15
Clause 9 provides amounts in Schedule 2 to acquire
administered assets, enhance existing administered assets and/or
discharge administered liabilities relating to activities
administered by agencies on behalf of the Government. Administered assets and liabilities
appropriations are provided for functions managed by an agency on
behalf of the Government. Administered assets and
liabilities items can be applied for any
outcomes of the agency in Schedule 2 of this Bill, or Schedule 1 to
Appropriation Bill (No. 1) 2010-2011.

16
Amounts appropriated for administered assets and liabilities items
can be subject to a reduction process in accordance with
clause 13 of the Bill. Under clause 13, the Minister
responsible for an agency may make a written request to ask the
Finance Minister to make a determination to reduce an item of
an agency. If the Finance Minister is responsible for the
agency, the Chief Executive of the agency may make the
request.

17
The Finance Minister manages payments from administered assets and
liabilities items by agencies through the issuing of drawing
rights, in accordance with
sections 26 and 27 of the FMA Act. Drawing rights control
who may spend money from appropriations, and they allow for
conditions and limits to be set by the Finance Minister (or
the Finance Minister’s
delegate) in relation to those activities.

Clause 10—Other departmental items

18
Clause 10 appropriates departmental non-operating appropriations in
the form of equity injections and loans, over which the agency also
exercises control. This clause provides that the amount specified
in other departmental items for an agency may be applied for the
departmental expenditure of the agency. In short:

· “equity injections” can be
provided to agencies to, for example, enable investment in assets
to facilitate departmental activities; and

· “loans” can be provided to
agencies when an investment in future departmental activities is
expected to result in a direct return such as an efficiency saving
(these are generally not formal loans established in
contracts).

19
Other departmental items are not expressed in terms of a particular
financial year and do not automatically lapse. Other departmental
items are available until they are spent. For example, equity
injection appropriations provide funding to meet the cost expected
to be incurred in the Budget year to acquire a new asset; however,
for a number of reasons, some part of the appropriation might not
be required until a later financial year. Amounts appropriated for
another departmental item can be subject to a reduction process in
accordance with clause 13 of the Bill.

20
The Finance Minister manages the payment from other departmental
items by agencies through the issuing of drawing rights
in accordance with
sections 26 and 27 of the FMA Act. Drawing rights control who
may spend from appropriations, and allow for conditions and limits
to be set by the Finance Minister (or the Finance Minister’s
delegate) in relation to those activities.

Clause 11—CAC Act body payment items

21
Clause 11 provides for direct appropriations of money for CAC Act
bodies to be paid from the CRF by the relevant department.
Clause 11 provides that payments for CAC Act bodies must be
used for the purposes of those bodies.

22
A CAC Act body is defined in clause 3 to be a Commonwealth
authority or a Commonwealth company within the meaning of the CAC
Act. Many CAC Act bodies receive funding directly from
appropriations. However, these bodies are legally separate from the
Commonwealth, and as a result, do not debit appropriations or
make payments from the CRF.

23
CAC Act body payments are initiated by requests to the relevant
portfolio agencies from the CAC Act bodies. The Finance Minister
manages appropriations for CAC Act bodies through the issuing of
drawing rights in accordance with sections 26 and 27 of the
FMA Act. Drawing rights control who may spend money from
appropriations and allow for conditions and limits to be set by the
Finance Minister (or the Finance Minister’s delegate)
in relation to those payments. CAC Act bodies hold the amounts
paid to them on their own account.

24
Subclause 11(2) provides that if a CAC Act body is subject to
another Act that requires amounts appropriated by Parliament for
the purposes of that body to be paid to the body, then the full
amount of the CAC Act body payment must be paid to the body. The
purpose of subclause 11(2) is to clarify that subclause 11(1)
is not intended to qualify any obligations in other legislation
regulating a CAC Act body, where that other legislation requires
the Commonwealth to pay the full amount appropriated for the
purposes of the body.

25
The full amount of the CAC Act body payments specified in
Schedule 2 may be reduced in accordance with clause 14.
Subclause 14(6 ) provides that subclause 11(2) does not
prevent the CAC Act body payments in Schedule 2 being
reduced.

26
In addition to the annual appropriations, some CAC Act bodies may
also receive public money from related entities such as a portfolio
department and from special appropriations managed by those
departments. Many CAC Act bodies also receive funds from external
sources.

Part 3—Adjusting appropriation items

27
Part 3 of the Bill provides for reductions or increases to the
amounts specified in Schedule 2. The reduction provisions are
contained in clauses 12 through 14 inclusive. The Advance to the
Finance Minister provision that can increase the amounts specified
in Schedule 2 is contained in clause 15.

28
Clauses 12, 13 and 14 have been amended since the previous
year’s Appropriation Bill, by introducing additional
mechanisms for initiating the reduction of unspent items. This has
the purpose of increasing the efficiency of the reduction process
particularly when surplus appropriations result from government
decisions.

Clause 12—Reducing State, ACT, NT and local
government items and administered items

29 Clause 12 provides for amounts
of State, ACT, NT and local government items and
administered items which are not
required at the end of the current year to be extinguished.
If the Government then decides that the amounts should be spent in
a later financial year, it must request Parliament to appropriate
these amounts in future Appropriation Bills.

30
Clause 12 limits the amount that may be applied for those items to
the amount reported in an agency’s annual report. Subclause
12(1) provides that if the amount published in the annual report is
less than the amount of the item, then the relevant item is taken
to be reduced to the amount specified in the annual report. The
amount of the item specified in Schedule 2 of the Bill may be
increased or reduced by the other clauses of Part 3 of the Bill or
in accordance with sections 30, 30A and 32 of the FMA Act. The
amount in the annual report must therefore be compared with the
amount for the item in Schedule 2, together with any adjustments
that have been made to that amount.

31
Subparagraph 12(2)(a)(i) retains a power for the Finance Minister
to make a written determination specifying that subclause 12(1)
does not apply in relation to the item. Subparagraph 12(2)(a)(ii)
enables the Finance Minister to determine that an amount published
in the financial statements of an agency is taken to be an amount
specified in his or her determination. The power in paragraph
12(2)(b) is to ensure that the amount published for the item can be
corrected if, for example, the amount is erroneous. Additionally,
the power in paragraph 12(2)(b) is to provide the Finance Minister
with the capacity to make a written determination in those cases
where an agency has failed to specify a required amount in its
annual report. In those cases, the amount specified in the
determination as the required amount will be taken to be the
required amount for the purposes of subclause 12(1).

32
Subclause 12(3) provides that a determination made under subclause
12(2) is a legislative instrument.

33
Despite subsection 44(2) of the Legislative Instruments Act
2003 (LI Act) , which provides that instruments made
under annual Appropriation Acts are not subject to disallowance,
subclause 12(3) provides that a determination reducing a
State, ACT, NT and local government items or an administered item
is subject to disallowance in accordance with section 42 of
the LI Act. Parliament retains the power to disallow a
determination to reduce one or more of these items because the
determination will reduce the amount of an appropriation authorised
by Parliament. Subclause 12(3) also confirms
subsection 54(2) of the LI Act , which provides that
instruments made under Appropriation Acts are not subject to
sunsetting.

34
Clause 13 provides a process for reducing administered assets and
liabilities items and other departmental items. Generally, these
items remain available until the appropriation is spent or reduced
in accordance with clause 13. This clause enables surplus
departmental item appropriation amounts to be reduced to promote
the efficient, effective and ethical management of any surplus
appropriations. Agencies should only spend all of an administered
assets and liabilities item or another departmental item if there
are government decisions to support that expenditure. Examples of
where clause 13 may be appropriate to reduce an administered
assets and liabilities item or another departmental item
include:

·
an excessive amount of appropriation was made in error;

·
an amount is reclassified and appropriated again under another kind
of appropriation (e.g. where an amount appropriated as
departmental is to be reclassified as administered and a new
administered appropriation is provided). The existing departmental
appropriation remains legally available even though there is no
Government authority to spend the funds;

·
efficiency savings result in a program costing less than expected;
or

·
a program is abolished under government policy before the
appropriation is expended.

35
Paragraph 13(1)(a) enables the Prime Minister, or a Minister acting
on behalf of the Prime Minister, to request the Finance Minister to
reduce an administered assets and liabilities item or an other
departmental item for an agency. Paragraph 13(1)(b) enables
the Minister responsible for a particular agency to request the
Finance Minister to reduce an administered assets and liabilities
item or an other departmental item for an agency for which they are
responsible. Paragraph 13(1)(c) enables the Chief Executive of
an agency for which the Finance Minister is responsible, to request
the Finance Minister to reduce an administered assets and
liabilities item or an other departmental item for that agency.
Subclause 13(6) assists readers by noting that a request under
subclause 13(1) is not a legislative instrument within the meaning
of section 5 of the LI Act, on the basis that it is
requesting a determination to be made and it is the determination
that has substantive effect.

36
Subclause 13(2) enables the Finance Minister to make a written
determination to reduce an administered assets and liabilities item
or another departmental item. The Finance Minister is not obliged
to act on a request to reduce excess appropriations. However, if
the Finance Minister does:

·
the determination must be for the amount specified in the request:
subclause 13(2);

·
the determination may not reduce the item below nil:
subclause 13(3); and

·
the item in Schedule 2 will be taken to be reduced in accordance
with the determination of the Finance Minister: subclause
13(4).

37
Subclause 13(7) provides that a determination made under
subclause 13(2) is a legislative instrument.

38
Despite subsection 44(2) of the LI Act , which provides
that instruments made under annual Appropriation Acts are not
subject to disallowance, subclause 13(7) provides that a
determination reducing an administered assets and liabilities item
or other departmental item, is subject to disallowance in
accordance with section 42 of the LI Act. Parliament
retains the power to disallow a determination to reduce a
departmental item because any such determination will reduce the
amount of an appropriation authorised by Parliament.
Subclause 13(7) also confirms subsection 54(2) of the
LI Act , which provides that instruments made under
annual Appropriation Acts are not subject to sunsetting.

39
Subclause 13(5) provides that a determination made under
subclause 13(2) once made, must not be rescinded, revoked,
amended or varied. Subclause 13(5) applies despite 33(3) of the AI
Act. This subclause intends to exclude the operation of 33(3) of
the AI Act from determinations made under subclause 13(2). The
purpose of subclause 13(5) is to ensure that the appropriation, if
reduced under the clause, cannot be restored by means of a later
determination.

Clause 14—Reducing CAC Act body payment items

40
Clause 14 provides a similar process for reducing CAC Act body
payment items to the process for reducing administered assets and
liabilities items and other departmental items. Paragraph 14(1)(a)
enables the Prime Minister, or a Minister acting on behalf of the
Prime Minister, to request that the Finance Minister reduce a CAC
Act body payment item for an agency. Paragraph 14(1)(b) enables the
Minister responsible for a particular agency to request the Finance
Minister to reduce a CAC Act body payment item for a body for which
they are responsible. Paragraph 14(1)(c) enables the Secretary
of the Department of Finance and Deregulation to request the
Finance Minister to reduce a CAC Act body payment item for a body
in the Finance and Deregulation portfolio. Subclause 14(7)
assists readers by noting that a request under subclause 14(1) is
not a legislative instrument within the meaning of section 5
of the LI Act, on the basis that it is requesting a
determination to be made and it is the determination that has
substantive effect.

41
Subclause 14(2) enables the Finance Minister to make a written
determination to reduce a CAC Act body payment item. The Finance
Minister is not obliged to act on a request to reduce an excess CAC
Act body payment item. However, if the Finance Minister does:

·
the determination must be for the amount specified in the request:
subclause 14(2);

·
the CAC Act body payment item in Schedule 2 will be taken to
be reduced in accordance with the determination of the Finance
Minister: subclause 14(4).

42
Subclause 14(6) provides that the full amount that is required to
be paid to a CAC Act body by subclause 11(2) of the Bill may
be reduced in accordance with this clause 14.

43
Subclause 14(8) provides that a determination made under
subclause 14(2) is a legislative instrument.

44
Despite subsection 44(2) of the LI Act , which provides
that instruments made under annual Appropriation Acts are not
subject to disallowance, subclause 14(8) provides that a
determination reducing a CAC Act body
payment item is subject to disallowance in accordance with
section 42 of the LI Act. Parliament retains the power to
disallow a determination to reduce a CAC Act body payment item
because any such determination will reduce the amount of an
appropriation authorised by Parliament. Subclause 14(8) also
confirms subsection 54(2) of the LI Act , which
provides that instruments made under annual Appropriation Acts are
not subject to sunsetting.

45
Subclause 14(5) provides that a determination made under subclause
14(2) once made, must not be rescinded, revoked, amended or varied.
Subclause 14(5) applies despite 33(3) of the AI Act. This subclause
intends to exclude the operation of 33(3) of the AI Act from
determinations made under subclause 14(2). The purpose of subclause
14(5) is to ensure that the appropriation, if reduced under the
clause, cannot be restored by means of a later determination.

Clause 15—Advance to the Finance Minister

46
Clause 15 enables the Finance Minister to provide additional
appropriations for items when satisfied there is an urgent need for
that expenditure, and the existing appropriation is inadequate.
This additional appropriation is referred to as the Advance to the
Finance Minister (AFM). Clause 15 provides that the total amount
that can be determined under the AFM provision is $380 million.

47
Subclause 15 (1) establishes the
criteria about which the Finance Minister must be satisfied before
determining to add an amount to an item of an agency. The Finance
Minister will only consider issuing an amount under subclause
15 (1) if satisfied there is an
urgent need for expenditure that is not provided for, or is
insufficiently provided for, in Schedule 2, because of an
omission or understatement, or because of unforeseen
circumstances [1] .
Generally, the other appropriation adjustment options in
Part 3 of the Bill or under sections 30, 30A and 32 of
the FMA Act must have been exhausted before the Finance Minister
will make a determination under subclause 15(2).

48
Subclause 15 (2) enables the
Finance Minister to make a determination to add an amount from the
AFM to an item in Schedule 2 ,
to a new item not already in Schedule 2, or to a new
outcome.

49
A further AFM provision will be requested in the additional
estimates Bills for the current year if pressures at that time
suggest the AFM in this Bill will be close to being exhausted
before the end of the financial year.

50
Subclause 15 (4) provides that a
determination under subclause 15 (2) is a legislative instrument, which must
be tabled in Parliament but is not subject to disallowance or
sunsetting.

Clause 16—Determinations under previous Acts

52 Clause 16 provides that certain
determinations previously made under previous appropriation Acts,
shall not be rescinded, revoked amended or varied on or after
1 July 2010. The purpose of clause 16 is to ensure
that any items, which have been reduced by instruments already made
under the listed appropriation Acts, cannot be restored by means of
a later determination.

Clause 17—Reducing Items in previous Acts

53
Clause 17 provides a process for reducing certain classes of
appropriation items in previous Acts, which is substantially
similar to the process for reducing administered assets and
liabilities items and other departmental items (clause 13) and CAC
Act body payments (clause 14). Paragraph 17(1)(a) enables the Prime
Minister, or a Minister acting on behalf of the Prime Minister, to
request that the Finance Minister reduce an administered assets and
liabilities item or an other departmental item in a previous Act.
Paragraph 17(1)(b) enables the Prime Minister, or a Minister acting
on behalf of the Prime Minister, to request that the Finance
Minister reduce a CAC Act body payment item in a previous Act.
Paragraph 17(1)(c) enables the Prime Minister, or a Minister acting
on behalf of the Prime Minister, to request that the Finance
Minister reduce an administered capital item in a previous Act.
Paragraph 17(1)(d) enables the Prime Minister, or a Minister acting
on behalf of the Prime Minister, to request that the Finance
Minister reduce a departmental capital item in a previous Act.
Subclause 17(6) assists readers by noting that a request under
subclause 17(1) is not a legislative instrument within the
meaning of section 5 of the Legislative Instruments Act 2003
(LI Act), on the basis that it is requesting a determination to be
made, and it is the determination under subclause 17(2) that has
substantive effect.

54
Subclause 17(2) enables the Finance Minister to make a written
determination to reduce the requested item. The Finance Minister is
not obliged to act on a request to reduce the item. However, if the
Finance Minister does:

·
the determination may be for the amount specified in the request:
subclause 17(2);

·
if the item is an administered assets and liabilities item, other
departmental item, administered capital item or departmental
capital item, the determination may not reduce the item below nil:
paragraph 17(3)(a);

·
if the item is a CAC Act body item, the determination may not
reduce the item below nil: paragraph 17(3)(b); and

·
the relevant item is taken to be reduced in accordance with the
determination of the Finance Minister: subclause 17(4).

55
Subclause 17(5) provides that a determination made under
subclause 17(2) once made, must not be rescinded, revoked,
amended or varied. Subclause 17(5) applies despite subsection 33(3)
of the AI Act. This subclause intends to exclude the operation of
subsection 33(3) of the AI Act from determinations made under
subclause 17(2). The purpose of subclause 17(5) is to ensure that
the relevant appropriation item, when reduced under
subclause 17(2), cannot be restored by means of a later
determination.

56
Despite subsection 44(2) of the LI Act, which provides that
instruments made under annual Appropriation Acts are not subject to
disallowance, subclause 17(7) provides that a determination
reducing a relevant item is subject to disallowance in accordance
with section 42 of the LI Act. Parliament retains the
power to disallow a determination to reduce an item because any
such determination will reduce the amount of an appropriation
authorised by Parliament. Subclause 17(7) also confirms
subsection 54(2) of the LI Act, which provides that
instruments made under annual Appropriation Acts are not subject to
sunsetting.

58
Clause 18 relates to the general drawing rights limits for the
Nation-building Funds Act 2008 and the Federal Financial
Relations Act 2009 . The general drawing rights limits provide
Parliament with a mechanism by which it may review the maximum
amounts that can be paid under each of these Acts in a financial
year. Note that this clause is not an appropriation for either of
the Nation-building Funds Act 2008 or and Federal
Financial Relations Act 2009 .

Nation-building Funds Act 2008

59
For the purposes of section 109 of the Nation-building Funds Act
2008 , subclause 18(1) provides the general drawing rights limit
for the Building Australia Fund (BAF) for the current
year.

60
The BAF is established under section 12 of
the Nation-building Funds Act 2008. It consists of the
investments of the BAF and the BAF Special Account, which is a
Special Account recognised under section 21 of the FMA Act and
established under section 13 of the Nation-building Funds
Act 2008 . The general drawing rights limit applies to the
main purposes of the BAF, namely making payments in relation to the
creation or development of transport infrastructure, communications
infrastructure, energy infrastructure and water infrastructure. The
general drawing rights limit does not apply to payments for
eligible Nation Broadband Network matters.

61
For the purposes of section 199 of the Nation-building Funds Act
2008 , subclause 18(2) provides the general drawing rights limit
for the Education Investment Fund (EIF) for the current
year.

62
The EIF is established under section 131 of the Nation-building
Funds Act 2008. It consists of the investments of the EIF and
the EIF Special Account, which is a Special Account recognised
under section 21 of the FMA Act and established under section
132 of the Nation-building Funds Act 2008 . The
general drawing rights limit applies to the main purposes of the
EIF, namely making payments in relation to the creation or
development of higher education infrastructure, research
infrastructure, vocational education and training infrastructure,
and eligible education infrastructure, as well as any transitional
Higher Education Endowment Fund payments.

63
For the purposes of section 267 of the Nation-building Funds Act
2008 , subclause 18(3) provides the general drawing rights limit
for the Health and Hospitals Fund (HHF) for the current
year.

64
The HHF is established under section 214 of
the Nation-building Funds Act 2008. It consists of the
investments of the HHF and the HHF Special Account, which is a
Special Account recognised under section 21 of the FMA Act and
established under section 215 of the Nation-building Funds
Act 2008 . The general drawing rights limit applies to the main
purposes of the HHF, namely making payments in relation to the
creation or development of health infrastructure.

65
It is important to note that this Bill will not appropriate amounts
to be paid from the BAF, the EIF or the HHF. The intention for
specifying general drawing rights limits in subclauses 18(1) to
18(3) inclusive is to set maximum limits on the amounts that may be
covered by drawing rights issued by the Finance Minister under the
FMA Act for the current year, for the purposes to which the limits
apply.

66
Under section 27 of the FMA Act, the Finance Minister is able to
issue drawing rights, without which no public money may be spent,
thereby providing a control mechanism over spending. That power has
been delegated to various officials. Clause 18 places a limit over
the amount of drawing rights that may be issued.

67
Specifying a general drawing rights limit, and thereby limiting the
ability to issue drawing rights to that limit, is an effective
mechanism to manage expenditure of public money as the official or
Minister making a payment of public money cannot do so without the
authority of a valid drawing right under the FMA Act. The purpose
of so doing is to provide Parliament with a transparent mechanism
by which it may review the rate at which amounts committed to the
BAF, EIF and HHF are expended.

68
The general drawing rights limits for the current year for the BAF,
EIF and HHF are specific to the current year applicable to
this Act and will not limit the general drawing rights limits that
may be specified in regard to any other year.

Federal Financial Relations Act 2009

69
For the purposes of paragraph 9(3)(b) of the Federal Financial
Relations Act 2009 , subclause 18(4) provides the general
drawing rights limit for general purpose financial assistance for
the current year.

70
This general drawing rights limit applies for the current year to
the amount that the Treasurer can credit to the COAG Reform Fund
and the total amount covered by drawing rights authorising debits
from that Fund for the purposes of making a grant of general
purpose financial assistance to a State, the Australian Capital
Territory or the Northern Territory.

71
The COAG Reform Fund was established by section 5 of the
COAG Reform Fund Act 2008 , which is a Special Account
under section 21 of the FMA Act. The purposes of the COAG Reform
Fund Special Account are provided at section 6 of the COAG
Reform Fund Act 2008 .

72
If a general drawing rights limit is not indicated in an
appropriation Act for the purposes of paragraph 9(3)(b) of the
Federal Financial Relations Act 2009 for a financial
year, amounts cannot be credited to the COAG Reform Fund under
paragraph 9(2)(a) of the Federal Financial Relations Act
2009 , and drawing rights must not be issued authorising
debits from the COAG Reform Fund for the purposes to which the
limit applies.

73
For the purposes of paragraph 16(3)(b) of the Federal Financial
Relations Act 2009 , subclause 18(5) provides the general
drawing rights limit for national partnership payments for the
current year.

74
This general drawing rights limit applies for the current year to
the amount that the Treasurer can credit to the COAG Reform Fund
and the total amount covered by drawing rights authorising debits
from that Fund for the purposes contained in paragraphs 16(1)(a) to
(c) inclusive of the Federal Financial Relations Act 2009 .
These purposes relate to making a grant of financial assistance to
a State to support the delivery by the State of specified outputs
or projects, facilitate reforms by the State, or reward the State
for nationally significant reforms.

75
If a general drawing rights limit is not indicated in an
appropriation Act for the purposes of paragraph 16(3)(b) of the
Federal Financial Relations Act 2009 for a financial
year, amounts cannot be credited to the COAG Reform Fund under
paragraph16(2)(a) of the Federal Financial Relations Act
2009 and drawing rights must not be issued authorising debits
from the COAG Reform Fund for the purposes to which the limit
applies.

76
It is important to note that this Bill will not appropriate amounts
to be paid under sections 9 and 16 of the Federal Financial
Relations Act 2009 . The intention for specifying general
drawing rights limits in subclauses 18(4) and 18(5) is to set
maximum limits on the amounts that may be covered by drawing rights
issued by the Finance Minister under the FMA Act for the current
year, for the purposes to which those limits apply.

77
Under section 27 of the FMA Act, the Finance Minister is able to
issue drawing rights, without which no public money may be spent,
thereby providing a control mechanism over spending. That power has
been delegated to various officials. Clause 18 places a limit over
the amount of drawing rights that may be issued.

78
Specifying a general drawing rights limit, and thereby limiting the
ability to issue drawing rights to that limit, is an effective
mechanism to manage expenditure of public money as the official or
Minister making a payment of public money cannot do so without the
authority of a valid drawing right under the FMA Act. The purpose
of so doing is to provide Parliament with a transparent mechanism
by which it may review the rate at which amounts are committed for
expenditure.

79
Subclause 18(6) provides for an increase to the general drawing
rights limit for National partnership payments, previously
specified in subsection 16(5) of the Appropriation Act (No. 2)
2009-2010 . For the purposes of the 2009-2010 Financial Year,
the general drawing rights limit is to be increased by
$2,000,000,000; from $23,000,000,000 to $25,000,000,000.

Clause 19—Adjustments for GST

80
The effect of this clause will be to increase a general drawing
rights limit by the amount of any GST qualifying amount in respect
of an amount paid from a fund named in clause 18.

81
Some payments from the Building Australia Fund, EIF, HHF and the
COAG Reform Fund may include a GST qualifying amount and the
relevant general drawing rights limit is adjusted accordingly. The
appropriation itself is not affected by clause 19 because that is
increased by the operation of section 30A of the FMA Act.
Essentially, clause 19 clarifies that the amounts specified
for the general drawing rights limits for 2010-11 are exclusive of
any GST qualifying amounts that may arise in respect of
acquisitions made in reliance on that limit.

Part 5—Miscellaneous

Clause 20—Crediting amounts to Special Accounts

82
Clause 20 provides that if the purpose of an item in Schedule
2 is also the purpose of a Special Account (regardless of whether
the item expressly refers to the Special Account), then amounts may
be debited against the appropriation for that item and credited to
the Special Account. Special Accounts may be established under the
FMA Act by a determination of the Finance Minister
(section 20) or by another Act (section 21). The
determination or Act that establishes the Special Account will
specify the purposes of the Special Account.

Clause 21—Conditions etc. applying to State,
ACT, NT and local government items

83
Clause 21 deals with Parliament’s power under section 96
of the Australian Constitution to provide financial
assistance to the States. Clause 21 delegates the power to the
responsible Ministers listed in Schedule 1 of the Bill, by
providing the Ministers named in Schedule 1 with the power to
determine:

·
conditions under which payments to the States, the ACT and NT and
local councils may be made: paragraph 21 (2)(a); and

·
the amounts and timing of those payments:
paragraph 21 (2)(b).

84
Subclause 21 (4) provides that
determinations made under subclause 21 (2) are not legislative instruments, because
these determinations are not altering the appropriations approved
by Parliament. Determinations under subclause 21 (2) will simply determine how appropriations
for State, ACT, NT and local government items will be paid. The
determinations are issued when required. However, payments can be
made without either determination.

85
Although financial assistance is provided to the ACT, NT and local
government authorities without reference to section 96 of the
Constitution, those payments are administered in the same way.
Therefore the Ministers identified in Schedule 1 may set the
amounts and timing and impose terms and conditions on those
payments. Subclause 21(5) also notes that clause 21 will not
limit the powers of the Commonwealth under section 96 of the
Constitution to provide financial assistance to a State which is
not appropriated by a State, ACT, NT and local government item.

Clause 22—Appropriation of the Consolidated Revenue
Fund

86
Clause 22 provides that the CRF is appropriated as necessary for
the purposes of the Bill. Significantly, this clause notes that the
amounts appropriated by the Bill may be affected by the FMA Act, in
particular sections 30, 30A and 32 of the FMA Act (see
clause 6).

Schedule 1—Payments to or for the States,
ACT, NT and local government

87
In accordance with clause 21 ,
Schedule 1 lists the Ministers responsible for determinations on
payments to or for the States, ACT, NT and local government.

Schedule 2—Services for which money is
appropriated

88
Schedule 2 specifies the services for which amounts will be
appropriated by the Bill. Schedule 2 contains a summary table
which lists the total amounts for each portfolio. A separate
summary table is included with further detail for each portfolio,
with other tables detailing the appropriations for each agency.

89
Schedule 2 includes, for information purposes, a figure for
the previous financial year labelled the Actual Available
Appropriation . The figure is printed in italics under each
appropriation amount to provide a comparison with the proposed
appropriations. The Actual Available Appropriation does not affect
the amounts available at law.

90
More details about the appropriations in Schedule 2 are contained in the PBS and the second reading speech.